The Affordable Care Act, President Obama’s signature health reform law, has turned out to be friendlier toward businesses than many ever imagined. The White House has twice delayed the deadline by which companies must comply with major provisions of the law, for instance, while easing up on other requirements.
But individuals are unlikely to get a similar break. The deadline for all Americans to have health insurance is March 31, and with only about 3.3 million enrolled so far, that leaves more than 40 million Americans who don’t have health insurance. Some of them will qualify for exemptions from the “individual mandate,” as it’s known, but that could still leave more than 10% of the U.S. population in violation of the law as of April 1.
The Obama administration recently gave businesses with 50 to 99 employees an extra year to meet the law’s requirements — pushing that deadline all the way to January 1, 2016 — raising the possibility it might offer similar relief to ordinary individuals. But the calculus is quite different for individual coverage, and it could undermine the entire health-reform law if the individual mandate gets postponed or eliminated. “The whole idea of the law is that everyone should get health insurance, and insurers have relied on that,” says Gary Claxton, a vice president at the nonprofit Kaiser Family Foundation. “Delaying the individual mandate would send a different message.”
Admission of defeat
It would also be a tacit admission of defeat for Obama, since the whole law is built around the requirement for everyone to have insurance. That’s the only way to assure healthy people sign up for coverage, along with the unhealthy, which is essential for balancing risk in the program and spreading costs widely enough to make it affordable for everybody.
There is some basis for delaying the individual mandate, since thorny technical problems with the government’s Healthcare.gov website prevented a lot of people from enrolling or getting information for a couple of months after the site went live on October 1. And there are still a considerable number of people who seem to be unaware they’re even required to purchase insurance. A recent poll by the nonprofit Commonwealth Fund found that only 63% of adults eligible for federal subsidies under the law are aware of the new state- and federally run “marketplaces” that offer coverage options. In a recent Kaiser poll, 81% said they’re aware the individual mandate exists, but that doesn’t mean they know when the deadline is or what they must do. The same poll, in fact, found that 44% of the public doesn’t have enough information to know how the law will affect them.
Even if Americans aren’t ready for it, there are a few important reasons the individual mandate deadline is likely to stand. Insurance companies set rates for people who qualify for Obamacare subsidies based on estimates of how many people will enroll, and that number would surely decline if the mandate were eased or delayed. Insurance companies are already crunching the numbers to figure out how to set premiums for 2015, and if fewer people enrolled, rates would go up — with that news probably coming out right around the time of the 2014 midterm elections in November. It’s a safe bet Obama will do whatever he can to prevent Obamacare from being an even harder sell for fellow Democrats campaigning for reelection.
The burden of complying with the law is also a lot lighter for individuals than for companies that have to adopt new benefit policies and deal with the cost and paperwork of new regulations. The principal reason Obama delayed the deadline for the employer mandate was to give companies more time to figure out everything they must do differently (and perhaps win a bit of pre-election goodwill). For uninsured individuals, it’s more straightforward — either buy health insurance and comply with the law, or choose not to and pay the penalty fees.
Even if the March 31 deadline is rooted in cement, however, there’s still a lot of wiggle room in terms of how the government enforces it. There are several provisions that exempt people from the individual mandate, for instance, including one for people who can’t afford it.
There’s also the very open question of how, or even whether, the government will force people to pay the penalty fees, which start at $95 or 1% of household income per person (whichever is higher) in 2014 and rise after that. The idea is to assess the fees when people file their taxes the following year, but that would exclude people who don’t file tax returns, which is likely to be controversial. And the public is in no mood for additional hassles from the IRS.
With Obamacare already unpopular, the requirement to have insurance could end up a mandate in name only.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.